Well the risk is that you inadvertently create a long term commitment (which may in turn breach your lease or thwart a planned development) and you then have to pay the occupier to go.  

However, some comfort may lie in recent decisions. First, the Courts strongly disapprove of occupiers claiming rights which fly in the face of agreements they have signed (see the Clear Channel (2004) and the Rolls Royce (2007) cases).  Secondly the Courts pay strong regard to whether the parties are likely to have wanted to confer statutory protection by an arrangement.   The Catalyst Housing v Katana (2010) case is an example of the latter approach. 

In 2004, Catalyst acquired a site for housing development.  They granted a 3 month letting to a Mr Roberts; adding that, if he stayed on after the 3 months, he would do so on a week’s notice.   He did just that and thereafter sublet the premises on a long term basis at a premium before disappearing.   In 2008, having eventually obtained planning, Catalyst sought possession from the subtenants.  They claimed protected business tenancies within the 1954 LTA. 

The Court held that a ‘tenancy at will’ must be presumed to have arisen between Catalyst and Mr Roberts at the end of the 3 months and that the subtenants could not have any greater interest than Mr Roberts.  The Court ordered possession. 

What’s interesting from a legal perspective is that, traditionally, a tenancy at will must be terminable “at will” – i.e. without notice; a point which informally drafted tenancies at will sometimes get wrong.   One might then have expected the one week’s notice wording to prevent a tenancy at will arising by presumption at the end of the 3 months.  The Court disagreed – it felt that the letting was clearly drafted to be temporary and outside the 1954 Act.

Judicial sleight of hand?  Possibly and perhaps surprisingly given that the subtenants were to some extent victims in the affair.  On the other hand, it was a housing development.

For more information on these issues please contact

Brian Kilcoyne

or your usual Lewis Silkin contact